It is important to acknowledge Colombia’s development of class actions, says David Gilbert of Goal Group

The growing globalisation of securities class actions means that, although the US is still the most developed and dominant centre, other legislatures around the globe are rapidly catching up. The root of this international diversification seems to have come about as a result of a combination of constraints on jurisdiction definitions in US federal courts, along with a growing desire to develop domestic class actions procedures in many countries around the globe.

In Colombia, Article 88 of the Constitution established that class actions are compensation mechanisms for damages caused to a group of individuals as a result of a transgression. The Colombian legal system has justified the creation and regulation of class action laws on the materialisation of the principle of procedural economy. The principle is essential to class actions since, with the same procedure, a group of people affected by a uniform cause can claim their rights.

In 1998, the Colombia Congress went on to pass Law 472, further expanding on the provision contained in Article 88 of the 1991 Constitution, which outlined the importance of protecting collective and public interests as well as certain individual rights from exposure to different kinds of harm.

Law 472 created two different types of actions. First, a popular action was established, which is a form of injunctive or declaratory relief for violations to the public interest. These popular actions can be brought by any citizen or group of citizens without needing to demonstrate any direct harm and—unlike all other judicial remedies—without legal representation.
The second type of action included in Law 472 is a group action, which is the most similar to the American class action in the way that it is used to enable large groups of individuals to aggregate their claims when they arise from facts or law common to the group, class or category. Contrary to what occurs in the case of popular actions, group actions arise from personal damages occurred as a result of the violation of individual rights, and their objective is to seek compensation for those damages.

Ultimately, it is important to acknowledge Colombia’s development of class actions legislation and courts’ appreciation of the potential benefits of this kind of regulation. As a result of this, it is vital that Colombia investors remain vigilant about their ability to participate in class actions in Colombia and other jurisdictions globally.

With Colombia investors now investing $13 billion in foreign equity shares, nearly doubled from $7 billion at the end of 2011 and $4 billion in 2009, according to the International Monetary Fund, it is clear that there is a duty to monitor and participate in securities class action and collective redress opportunities in various countries around the world. Investment in the US from Colombian investors was $9 billion, nearly $2 billion in Luxembourg and $1.5 billion in Chile.

Goal Group’s analysis of its class actions knowledge base predicts that by 2020 securities class action, group and collective redress settlements outside of the US will reach $8.3 billion annually. The analysis also predicts that an estimated $2.02 billion of global investors’ rightful returns will be left unclaimed each year by non-participation.
It is clear that there are still significant amounts being left unclaimed each year due to non-participation in class actions. It is the responsibility of fund managers and custodians to remain vigilant and monitor international opportunities to participate in securities class actions in order to reclaim losses. There are also now a number of specialist services available that automate the process of class action participation. This significantly minimises the complexity and cost of recovery, meaning that there becomes no real or viable excuse for non-participation from fund managers and institutional investors.

As securities class actions globalise, all investors and trustees must remain vigilant and monitor both home country and global opportunities to participate in class actions to reclaim rightful returns. All parties should acknowledge the cross-border opportunities presented by legislatures such as Colombia, to reclaim damages to which they are legally entitled.

Country profiles
The latest country profiles from Asset Servicing Times
The Asian market may be improving on the harmonisation front, but the situation is still far from ideal. Experts discuss what there is still left to do
Brazil is hogging the limelight from its South American neighbours. But, although reforms are in full swing, there is still work to be done
Securities Lending Times

Visit our sister site
for all the latest securities lending news and analysis
No nation is an island, and the Polish CSD has post-trade services to cater to all of Central and Eastern Europe, says KDPW’s Iwona Sroka
In a region as geographically, culturally and economically diverse as Asia, funds passports have a tricky road ahead if they’re to redefine the industry
Amid cross-border restrictions and tightened belts, Luxembourg’s kingdom of real estate investment won’t be crumbling any time soon
The Chinese market has taken a knock to its confidence, but despite its size, it is still merely an emerging market, and must take these setbacks in its stride
Rich in sunshine, cork hats and tired clichés, Australia’s funds industry doesn’t buck the trend, boasting record levels of assets under custody
As the Saudi Arabian stock exchange finally opens its doors to foreign investments, the influx from abroad will be in baby steps, not leaps and bounds
View country profiles section
The latest features from Asset Servicing Times
Matt Davey, new recruit to SGSS’s business solutions team, speaks to Stephanie Palmer on the trials and trends he’s seeing in the sector
As the FCA consults on the potential expansion of its Senior Management and Certification Regime, Stephanie Palmer gauges the initial reactions
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
In a climate of regulatory change, cost pressures and cyber threats, the network management industry will be at its strongest if it sticks together. Stephanie Palmer reports from The Network Forum in Warsaw
Regulation and technology were still the hottest topics in town at Fund Forum International in Berlin. Stephanie Palmer reports
As the active-passive fund debate reaches fever pitch, there is a third option, says Broadridge’s Stephanie Clarke
Asset managers are increasingly relying on data, and the service providers that can manage it, heard attendees at London’s TSAM conference
As the long-standing Barclays Point risk analytics solution winds down to retirement, investment managers have some tricky decisions to make, according to Confluence’s Katie Kiss
Fund administrators could be best off leaving back-office technology upgrades to the professionals, says Kelly Ashe of Pacific Fund Systems
View features section
The latest interviews from Asset Servicing Times
Drew Nicol and BNY Mellon’s James Slater discuss the results of a joint research study with PwC exploring buy-side opinions on central counterparties, incoming collateral rules and the rise of peer-to-peer lending
Real Estate Investment Times

Visit our sister site
for all the latest real estate investment news
View interviews section